A plan to cut state funding for disability services threatens to disrupt the lives of thousands of vulnerable Minnesotans who depend on state services to live and work in the community, according to a class-action lawsuit filed Tuesday in federal court.

Two large organizations that represent hundreds of disability service providers are seeking an emergency court order to prevent a 7 percent cut to the rates paid through the state’s Medicaid “waiver” program, which helps people with disabilities pay for transportation, personal caregiving and other support services that help them live more independently. The cuts were scheduled to go into effect on July 1.

“This cut will cause irreparable harm to our members and the people with disabilities they support as we are already in the midst of a workforce crisis due in large part to lack of wage competition,” said Sue Schettle, chief executive of the Association of Residential Resources in Minnesota (ARRM), a plaintiff in the 39-page lawsuit, which represents more than 200 providers.

Minnesota Department of Human Services Commissioner Emily Piper, the defendant in the lawsuit, said in a written statement that her agency is required by the federal government to adjust some rates for disability-related services under a complicated new rate-setting methodology. She said her agency will carefully review the lawsuit.

This spring, disability advocates and trade groups for providers joined in an aggressive push to prevent the 7 percent cut, which they estimate will cost disability service providers more than $80 million in lost funding in the next two fiscal years. At the last moment, however, a negotiated fix failed to survive Gov. Mark Dayton’s veto pen, as he nixed a 990-page budget bill that included funding for disability service providers, but was full of unrelated and controversial measures he opposed.

According to the lawsuit, the cuts will affect about 32,000 individuals across the state who rely on Medicaid waivers, a coveted form of Medicaid assistance that pays for services that would enable them to live more independent lives.

The cuts, advocates warn, also could imperil the state’s efforts to improve access to community services for people with disabilities and to comply with a landmark 1999 Supreme Court ruling, known as the Olmstead decision, which requires states to ensure that people live and work in the most integrated settings possible.

In 2015, the Dayton administration and disability service providers began to implement a detailed blueprint, known as the “Olmstead plan,” for expanding community services for people with disabilities and integrating more people into the mainstream workforce and housing of their choosing. Meeting the state’s requirements under the Olmstead plan would now be more difficult, providers maintain.

“A requirement of Minnesota’s Olmstead Plan is adequate funding to support the staffing and services necessary to achieve its goals, and these cuts would push an already straining system beyond its capacity,” said Schettle of ARRM.

The plaintiffs in the lawsuit include the Minnesota Organization for Habilitation and Rehabilitation (MOHR), which represents 100 day-service providers statewide as well as four individuals with disabilities who receive services through the Medicaid waiver program.

Shortage of workers

The impending cuts are expected to hit at a time when disability service providers are already feeling the strains of a severe shortage of workers. Across the state, group homes, personal care agencies and day activity centers for people with disabilities are struggling to find and retain caregivers who can help people with basic activities such as eating, dressing and bathing. The number of unfilled caregiving jobs across the state is at its highest level in more than 15 years, according to the state workforce agency.

Shannon Bock, executive director of a nonprofit that operates 37 group homes for adults with disabilities in the Moorhead area, said the cuts could jeopardize their ability to provide services that would help their residents feel more integrated in society. This includes outdoor camps, outings into the community, and fun events like fishing trips and community dances, that have traditionally been provided by the agency.

“Unfortunately, people will become more isolated and have fewer possibilities of having relationships outside of the disability community,” said Bock, whose nonprofit agency, Creative Care for Reaching Independence, has about 450 clients. “We just wouldn’t have the resources to provide the same level of access to the community.”